(Bloomberg) — Stock futures rose and bond yields fell after inflation data that matched estimates reinforced speculation the Federal Reserve will start cutting interest rates in the first half of 2024.
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S&P 500 contracts rose after the US benchmark gauge closed at the highest since March 2022. Treasury two-year yields, which are more sensitive to imminent Fed moves, dropped seven basis points to 4.64%. The dollar retreated.
Read: US Nov. CPI Rose 3.1% Y/y, Matching Est.
Signs of a slowdown in inflation helped drive the US bond market last month to its biggest gain since the mid-1980s, with yields tumbling sharply on speculation the Fed will cut its benchmark rate by over a full percentage point in 2024, starting in the first half of the year. Data Monday showed US consumers’ near-term inflation expectations dropped in November to the lowest level since April 2021.
After the CPI release, investors will be tasked with absorbing Tuesday’s $21 billion of 30-year supply that will round out this week’s coupon auction series ahead of the fed decision, noted Ian Lyngen at BMO Capital Markets.
Corporate Highlights:
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Google’s legal defeat at the hands of Fortnite maker Epic Games Inc. threatens to roil an app store duopoly with Apple Inc. that generates close to $200 billion a year and dictates how billions of consumers use mobile devices.
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Oracle Corp. reported slowing quarterly sales growth in its cloud computing business, fueling investor fears that the software maker’s expansion efforts have yet to gain ground in the competitive market.
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Macy’s Inc. was cut to sell at Citigroup Inc. on skepticism that a buyout offer from Arkhouse Management and Brigade Capital Management will actually materialize.
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Walt Disney Co. and Reliance Industries Ltd., led by Asia’s richest tycoon Mukesh Ambani, are expected to sign a non-binding pact as early as Monday to merge their media operations in India in a cash-and-stock deal, according to people familiar with the matter.
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Country Garden Holdings Co., the Chinese builder whose liquidity crunch shook the nation’s financial markets, is likely to avoid its first default on yuan bonds after most holders of a local note agreed not to demand repayment this week, people familiar with the matter said.
Key events this week:
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Eurozone industrial production, Wednesday
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US PPI, Wednesday
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Federal Reserve policy meeting and news conference with Chair Jerome Powell, Wednesday
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European Central Bank policy meeting followed by news conference with ECB President Christine Lagarde, Thursday
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Bank of England policy meeting, Thursday
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Swiss National Bank policy meeting, Thursday
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US initial jobless claims, retail sales, business inventories, Thursday
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China 1-yr MLF rate and volume, property prices, retail sales, industrial production, jobless rate, Friday
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Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Friday
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US industrial production, Empire manufacturing, cross-border investment, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.3% as of 8:32 a.m. New York time
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Nasdaq 100 futures rose 0.5%
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Futures on the Dow Jones Industrial Average rose 0.4%
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The Stoxx Europe 600 was little changed
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The MSCI World index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index fell 0.5%
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The euro rose 0.6% to $1.0825
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The British pound rose 0.4% to $1.2611
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The Japanese yen rose 1% to 144.76 per dollar
Cryptocurrencies
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Bitcoin rose 1.9% to $41,954.57
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Ether rose 0.5% to $2,227.09
Bonds
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The yield on 10-year Treasuries declined seven basis points to 4.16%
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Germany’s 10-year yield declined eight basis points to 2.19%
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Britain’s 10-year yield declined 13 basis points to 3.95%
Commodities
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West Texas Intermediate crude fell 0.7% to $70.80 a barrel
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Spot gold rose 0.6% to $1,994.82 an ounce
This story was produced with the assistance of Bloomberg Automation.
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